The pound has fallen below US$1.29 for the first time in almost a year on continuing worries Britain will leave the EU without a trade deal. Sterling also hit a nine-month low against the euro, and was down against the yen and Swiss franc.
Bank of England Governor Mark Carney said on Friday Britain faces an “uncomfortably high” risk of leaving the European Union with no deal, comments that drove sterling to an 11-day low against the dollar.
The Bank of England announced a rate hike despite ongoing uncertainty over the future of the U.K. economy. The Monetary Policy Committee voted unanimously for an increase in rates from 0.5 to 0.75% on the back of a strong labor market and credit growth.
Chancellor Philip Hammond has criticized claims from European Union officials that Britain has a “fantasy” approach to Brexit negotiations. Mr Hammond insisted that talks with EU officials were “constructive” after reports from the continent that Britain was being “unrealistic” and little progress made in discussions in recent days.
The Bank of England has backed off from raising interest rates as it slashed 2018 growth forecasts, but said the economy would bounce back from a weather-hit “soft patch”. Policymakers kept the prospect of rate hikes firmly on the cards, although it sparked confusion over when the next increase may come.
The UK economy grew at its slowest rate since 2012 in the first quarter of the year, the Office for National Statistics (ONS) has said. GDP growth was 0.1%, down from 0.4% in the previous quarter, driven by a sharp fall in construction output and a sluggish manufacturing sector.
The Bank of England is likely to raise interest rates twice this year and twice in 2019, despite a sluggish economy, says a forecasting body. Bank governor Mark Carney has said a rate rise is “likely” this year, but any increases will be gradual.
A deeper relationship with Europe will benefit the UK economy, the governor of the Bank of England has argued. Mark Carney's comments follow claims by chancellor Philip Hammond that the UK and EU economies will only move very modestly apart after Brexit.
Britain’s regulators will convert banking and insurance rules inherited from the European Union after Brexit to make them more tailored to the British market, Bank of England Governor Mark Carney said on Wednesday. Carney said Britain had long expressed opposition to the EU’s cap on banker bonuses, the full application of banking capital rules on smaller lenders and the bloc’s insurance capital rules.
The Bank of England has raised interest rates for the first time in a decade to contain an increase in inflation stoked by the Brexit vote, in what is otherwise a moment of high uncertainty for the economy. In a statement Thursday, the bank said it had lifted its benchmark rate, which affects the cost of loans and savings rates in the wider economy, to 0.50% from the record low of 0.25%.